Why a cash only budget might be right for you

Why a CASH ONLY BUDGET Might Be Right For You


Not everyone who uses a budget likes to use cash but some people were meant to use the cash only budgeting system because it’s right for them.

A budget for us meant that it was going to help us build wealth and keep us debt free along the way. So far I have to say it’s doing its job but it’s not working on its own. It takes two, the budget and you to work.

Cash is something that most people hang on to for dear life and not in the sense of saving but making sure they don’t lose it. Why? It’s simple. Cash can get you from point A to point B or buy you whatever you need.

Cash is what makes the world go round and what keeps most people sane simply because when we have no cash, life sucks.

The problem with cash for some people is that they don’t know how to hang on to it nor do they know how to use a credit card properly.

Forget the credit card the debit card is a much easier form of plastic to blow money with and it’s used widely but not everyone knows how to handle cash and plastic the same way.

I know I’ve said budgeting isn’t rocket science and it’s not but for some people the simple art of saving money is difficult. I know one lady who has had many credit cards over the years and each one has been maxed out.

She can’t control her spending habits with a credit card so how on earth would a budget work for her?

Sure she could budget IF she wanted to but if she is freely spending money she doesn’t have odds are the budget will never balance. As well, she likely would not have the savings to pay for the credit card in full each month.

That is where the credit card frenzy becomes fun for those who do pay off a credit card in full each month. One of my fans gets so many perks using a credit card she doesn’t even care how much interest they are charging.


Simple, she pays the credit card in full each month. She is responsible with her credit cards and knows that if she is smart she can make the credit card work in her favour which helps her and her husband travel for nearly nothing each year.

We are the same with using a credit card and hardly ever have cash on us or use the debit card unless we have to. Most times if we are forced to use a debit card my wife and I look at each other trying to remember the pin number, lol. That goes to show you how often we use it.

Earlier last year we had a guest post by Eva from Teens Got Cents and she talked about using the cash envelope system which is a great alternative for those who want to budget but just can’t get a grip on using available credit or they simply don’t have any available credit.

Related: The Magic Cash Budget Jars Changed Our Lives

The key factor here is that using a cash only budgeting system still means that you are responsible about how you are spending your money. You still need to document your expenses and pay off your debts each month with the cash.

The simplified part with the cash only budget is that you are using cash. Once the cash is gone, it’s gone.

Getting rid of credit cards

Our friend who just can’t seem to work the available credit in her name has since gotten rid of her credit cards which was a choice she made on her own.

If you decide to cancel your credit cards I’d make sure to order your free credit report to see exactly what you have for credit cards in your name and consult with a professional.

If you know that you can’t sit down each week or at least once or twice per month to input data into a budget so you know where all your money is going and what you have left to spend chances are a cash only budget is better for you.

I’m not saying it won’t work just guessing how much you’ve spent all month using credit and debit cards but if you can’t pay the cards in full nor care about how much you’ve spent why waste your time with a budget in the first place.

Credit cards were never meant to be used as free money even though many people use them that way with excuse after excuse how they will pay them off.

For some reason doing the math paying interest on the balance doesn’t register and even if they do find out how much the credit card companies are making from them they don’t care.

As long as no one is knocking on their door trying to collect money and that minimum balance is being paid, all is good.

That’s a bad attitude to have and if you want to tell me you have no other choice I’ll say then you need to make a decision and fast. You’re credit card won’t last you forever and you still need to pay that money back and live.

Cash Only Budget

Using cash to budget is great for those who don’t want any money temptation each month. It’s also a great way to manage your obsession with shopping and spending on items you don’t need.

I often see people selling stuff online and wonder where on earth they get all of this stuff let alone store in their house. Sometimes you see the oddest items and wonder if they actually bought it or someone was silly enough to blog their own cash to buy it as a gift for them.

Cash only is the one way that will force you to stick to your budget as long as you make sure you keep true to monitoring your budget.

It’s easy to spend cash just as fast as using debit or credit cards so learning how to say no I’m on a budget is still important.

If your friends want to go out for dinner and you have no cash in your wallet, say no sorry not tonight. End of story.

They will understand if they are your friends. If you feel left out because you don’t have enough cash to do things with your friends then pay down debt, earn more money and save more money.

It’s not that hard to figure out really but if you choose to ignore the simplicity of budgeting for life then you have to deal with the bills coming in and finding a way to pay for them or limiting what you can do because there is no more money to go around.

A great way to start learning if the cash budget is for you is to hide those credit and debit cards and forget about them for a few months. If you still owe a balance on them you will need to pay them. You hid the card not what you owe on them, so don’t kid yourself.

Budgeting IS Important

If you don’t already have a budget in place you can download our free excel budget at Canadian Budget Binder if you like. You don’t need to pay to use a budget it’s fairly straightforward although there are some other great free budgeting systems on the internet so choose what’s right for you.

Some people thrive on the pen and paper budget keeping notes in a budget binder or book and that’s fine as well.

I post our family budget every month for 2 adults so if you want an example of a real budget simply search this blog under the “Our Budget” category and see how we are spending our money.

Not every month is great but what we know is where our money is going.

The great thing about a paper budget is that you can keep it on you at all times or if you have one of those fancy phones there are many budgeting apps that allow you to check in on your budget if you need to while you are out.

For us, we are confident in knowing our numbers and what we can and can’t spend when we go shopping because we update our budget weekly.

If you like the cash envelope system like Eva or any other system to separate how much cash you have to spend in your budget categories use what’s easiest for you.

Don’t forget to always ask for receipts whether you use cash or not because without your receipts it’s difficult to track your spending and guessing isn’t going to be good enough for a budget.

Calculate your basic average income that you brought into the household over the past 3-6 months. It’s better to budget using a lower net monthly income than a higher one especially if your hours fluctuate. This will give you a more accurate figure to budget with.

For the next few months use the cash only budget and see if you are able to pay down your debts faster and stop spending money you don’t have.

Eventually you will know whether the cash only budget is for you or you simply aren’t meant to budget at all because you aren’t devoting the time necessary to getting or keeping your finances on track. You may think carrying that credit card with you and taking out a cash advance on the card is smart, but think again.

You’ll pay dearly so put the credit cards away so you give yourself a fair shot using cash only for the few months. At the end you can check how you made out over the course of the 3 or so months and decide what’s best for you.

I’d suggest talking to a professional financial advisor or someone who specializes in helping people one on one with budgeting their money if you’re still struggling with your finances.

Sometimes it takes more than reading a blog post or articles on the internet and you need someone to guide you in person.

If that’s you then do what you need to do, after all isn’t your life worth that much? I know mine is.

Discussion: Do you use a cash only budget and how has it changed your life?

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Photo Credit: Freedigitalphotos.net/StuartMiles

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  1. I prefer using credit cards for everything. I pay it off once or twice a week – sometimes even before the charges appear. So technically, I employ a “cash” system because money doesn’t stay in my accounts – it leaves as soon as it is spent.

    I don’t like dealing with cash (ie counting etc) and I LOVE the rewards I get with my credit card. It’s at least $300 in cashback rewards every year!

    1. So, essentially you use the credit cards for rewards like we do. You just pay it off as soon as you can which is great as long as it’s paid in full. Good for you.

  2. Honestly, I’m not a fan of credit card since before, I preferred to use cash instead. My parents told me before that it’s better to use cash rather than a “Credit” card. When I started reading finance blogs, I’ve learned that the credit cards have advantages and disadvantages, once you’re a credit card holder you should be fully responsible. But in the end, I still want to use cash. 🙂

  3. While I agree that cash may work best for some, for me the rewards associated we a credit card are too good to pass up. I earn 4% cash back on gas and groceries and it’s really starting to add up. Mind you, it isn’t an excuse to overspend but it’s an easy way to earn more cash back. I have never had an unpaid balance on my credit card and never paid any interest

    1. We’ve never paid a penny to interest on any credit cards and love the rewards as well. For those that simply can’t manage to use the card and pay it in full each month the cash budget is the way to go. Cheers mate

  4. Most of the bills here come out automatically. A couple are paid online. I use debit for things like groceries. It gets entered in the bank register book as soon as I get home. Back when we used our M/C we always had a post-it note attached to the bill that we used to write down what was charged on it as soon as possible just like we did with the checking account. When the new bill came in I would check off things from the post-it to the new bill.
    Cash is used for the little things like a newspaper or some such. We keep a very close eye on what is spent, or at least I do…. Cash would be too easy to spend here. Having to look at that bank book and see just how fast the money disappears does help. Being visual here, seeing it go is what is needed.

    1. It’s amazing how we all differ so much. Cash for some is perfect and for others can be a nightmare. I like that you take care of business as soon as you get home. Many people who put it off tend to forget or give up. Have you ever tried to use a cash budget or just know that it wouldn’t work?

  5. You know, I went cash only for years before I felt comfortable using credit cards. I had to make sure I was ready. These days, I couldn’t imagine not using credit cards. I enjoy the rewards I earn, and the convenience in tracking and categorizing my purchases. However, I definitely agree that the cash only budget is best for some people!

    1. Same here.. the rewards are what keep us using the credit cards. Now do you fancy one credit card over another or do you open many credit card accounts to get various rewards?

  6. When I was in the middle of paying off debt I strictly used a cash only budget and it definitely helped me get on track and watch my spending more. Now that I’m pretty far removed from that we use a modified cash budget, it’s sort of ironic really…we still take out the cash each month but use our credit cards to earn the points and then pay those off with the cash. We get the points and stay on track, best of both worlds. 🙂

  7. My sister does cash only. But when I see her sitting at the table with hundreds of dollars trying to figure out what she spent money one… I just cant do it myself!

  8. We use the cash only system for our clothes budget. All the other expenses we use a debit card. When we made the switch from credit to debit cards our spending decreased significantly and our savings rate skyrocketed.

  9. Using a cash only budget can work really well for some people. Long ago, when I did financial planning for people, I suggested a cash only budget to people who could not control their credit card spending. For some it worked. Others just had to cut up their credit cards. Thing is though, using a cash only budget, you still have to have a budget and stick with that budget.

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